1. FABM 1 Introduction to Accounting.pptx

FABM1First lesson

1. Introduction to Accounting

2. Lesson objective At the end of this lesson, the learners will be able to: define accounting and; describe the nature of accounting;

3. Do your parents ask how you spend your allowance every day?

4. When deciding between buying a bottle of soft drinks or fruit juice, what is the basis of your decision?

5. When going home, do you sometimes choose to walk from school rather than riding a tricycle because you want to save?

6. Is accounting important to you?

7. What words or concepts come into your minds when you hear the word “accounting”?

8. What is Accounting? “The art of RECORDING , CLASSIFYING and SUMMARIZING in a significant manner and in terms of money , transactions and events which are in part at least of a financial character and interpreting the result thereof” (AICPA) AICPA – American Institute of Certified Public Accountants

9. What is Accounting? “Accounting is the process of IDENTIFYING, RECORDING, and COMMUNICATING economic events of an organization to interested users.” ( Weygandt , J. et. al)

10. Why IDENTIFYING? IDENTIFYING – this involves selecting economic events that are relevant to a particular business transaction

11. Why RECORDING? RECORDING – this involves keeping a chronological diary of events that are measured in pesos.

12. Why COMMUNICATING? COMMUNICATING – occurs through the preparation and distribution of financial and other accounting reports.

13. NATURE OF ACCOUNTING Accounting is a service activity Accounting is a process Accounting is both an art and a discipline Accounting deals with financial information and transactions Accounting is an information system

14. Function of Accounting Accounting is the means by which business information is communicated to business owners and stakeholders

15. Accounting helps the users of these financial reports to see the true picture of the business in financial terms. In order for a business to survive, it is important that a business owner or manager be well-informed

16. Mr. Pacis is a retired government employee who is good at baking. One day he decides to put up a bakery shop in your barangay. He renovates a portion of his house to serve as the area for the production of bread. He purchases baking equipment and raw materials to produce five different types of bread. Mr. Pacis also hires AJ to help him with the baking and, at the same time, to be in-charge of sales. Mr. Pacis pays AJ on a weekly basis. Every day, Mr. Pacis ’ wife deposits the daily cash sales in their bank account at ABM Savings Bank. With the help of accounting, what possible decisions or questions of Mr. Pacis can accounting provide an answer to?

17. The history of accounting Accounting is as old as civilization itself. It has evolved in response to various social and economic needs of men. Accounting started as a simple recording of repetitive exchanges. The history of accounting is often seen as indistinguishable from the history of finance and business.

18. The Cradle of Civilization Around 3600 B.C., record-keeping was already common from Mesopotamia, China and India to Central and South America. The oldest evidence of this practice was the “clay tablet” of Mesopotamia which dealt with commercial transactions at the time such as listing of accounts receivable and accounts payable.

19. 14th Century - Double-Entry Bookkeeping The most important event in accounting history is generally considered to be the dissemination of double entry bookkeeping by Luca Pacioli (‘The Father of Accounting’) in 14th century Italy. Pacioli was much revered in his day, and was a friend and contemporary of Leonardo da Vinci. The Italians of the 14th to 16th centuries are widely acknowledged as the fathers of modern accounting and were the first to commonly use Arabic numerals, rather than Roman, for tracking business accounts. Luca Pacioli wrote Summa de Arithmetica , the first book published that contained a detailed chapter on double-entry bookkeeping

20. French Revolution (1700s) The thorough study of accounting and development of accounting theory began during this period. Social upheavals affecting government, finances, laws, customs and business had greatly influenced the development of accounting.

21. The Industrial Revolution (1760-1830) Mass production and the great importance of fixed assets were given attention during this period.

22. 19th Century – The Beginnings of Modern Accounting in Europe and America The modern, formal accounting profession emerged in Scotland in 1854 when Queen Victoria granted a Royal Charter to the Institute of Accountants in Glasgow, creating the profession of the Chartered Accountant (CA). 
 In the late 1800s, chartered accountants from Scotland and Britain came to the U.S. to audit British investments. Some of these accountants stayed in the U.S., setting up accounting practices and becoming the origins of several U.S. accounting firms. The first national U.S. accounting society was set up in 1887. The American Association of Public Accountants was the forerunner to the current American Institute of Certified Public Accountants (AICPA).

23. The Present - The Development of Modern Accounting Standards and Commerce The accounting profession in the 20th century developed around state requirements for financial statement audits. Beyond the industry's self-regulation, the government also sets accounting standards, through laws and agencies such as the Securities and Exchange Commission (SEC). As economies worldwide continued to globalize, accounting regulatory bodies required accounting practitioners to observe International Accounting Standards. This is to assure transparency and reliability, and to obtain greater confidence on accounting information used by global investors.

24. “The roots of education are bitter, but the fruit is sweet.” - Aristotle

25. THANK YOU STUDY HARD